Your best bet would be to use gstreamer, as it has access to the dsp acceleration for encoding to h.264. First you will need to install "gstreamer0.10-tools"

This (single) line should get you started:
I know this might look confusing, but gstreamer does for video and audio what bash does stdin and stdout. To break this command down:

1. Get video input from camera
2. Encode it to h264 using the dsp
3. mux it to avi format
4. store to a file
   Now that you can get video encoded by the dsp, basic searches on the web will help you do the reset, e.g. how to get audio, and mux it into the same avi file. You can also display the video while it is encoding.
   
   Enjoy.
   P.S. if you know how to adjust the colours and focus of the camera let me know.